Remember when Bush lowered taxes? What happened after that? Was it the biggest recession in 30 years? Was it?

I guess you're too young to remember that the country was slipping into recession at the end of the Clinton Presidency... Bush SIMPLIFIED the tax code, thus it became easier for businesses to pay taxes rather than hire armies of accountants & lawyers to skirt them... Revenues Increased.

Lowering taxes gives people more money to spend. The more money you spend the bigger businesses grow. The bigger they grow, the higher the demand for their products. The higher the demand, the higher the production. The higher the production the more jobs are needed. Thus new jobs.

I guess you're too young to remember that the country was slipping into recession at the end of the Clinton Presidency... Bush SIMPLIFIED the tax code, thus it became easier for businesses to pay taxes rather than hire armies of accountants & lawyers to skirt them... Revenues Increased.

That slight "recession" was because of the dot-com bust, not Clinton's policies.

Which "recession" was worse, by the way? The one I mentioned that you didn't even respond to, or this horrific Clinton recession of doom?

Lowering taxes gives people more money to spend. The more money you spend the bigger businesses grow. The bigger they grow, the higher the demand for their products. The higher the demand, the higher the production. The higher the production the more jobs are needed. Thus new jobs.

Did you even take an Econ class in college?

That is not how supply and demand works. If there is no demand, there is no reason to make a company bigger...

It's clear who missed his econ classes.

Lowering taxes only gives lower and middle class more cash to spend. Rich people just hide it away in banks to gather interest. They don't NEED the extra money.

Great economies are built by a strong middle class (to create demand for products and services).

Lowering taxes gives people more money to spend. The more money you spend the bigger businesses grow. The bigger they grow, the higher the demand for their products. The higher the demand, the higher the production. The higher the production the more jobs are needed. Thus new jobs.

Did you even take an Econ class in college?

I asked you for empirical evidence, not theory. And the theory of 'trickle down' was put to the test in reality and it was a colossal and costly failure. From just a few hrs ago:

The Bush Era Tax Cuts Didn't Create The Wealth They Were Supposed To

The Republican Party has long promoted itself as the party of business.
Republicans understand the needs of business, we are told, and if the country would leave the economy in their hands business would boom.
All we need to do is to give those at the very top of the income distribution – the “job creators” – more income through tax breaks, and then sit back and wait for the magic happen.

Our investment in the wealthy will produce remarkable economic growth, and everyone will be better off.

The Bush tax cuts were a test of these claims about supply-side economic policies. To justify the tax cuts the nation was, in effect, given a business prospectus from the Republican Party.

We were promised that cutting taxes on the wealthy would result in much higher economic growth and broadly shared prosperity. For those who wondered how we would pay for such a large cut to the government’s revenue stream, the Republican prospectus had a remarkable claim.

The tax cuts wouldn’t cost us anything. Growth would be so strong that the tax cuts would more than pay for themselves. Even those who admitted that the tax cuts might not be fully self-financing still made strong claims about faster economic growth offsetting much of the lost revenue from the tax cuts.

The reality, of course, has been quite different. There is little evidence that the Bush tax cuts, or any other tax cuts directed at the so-called job creators, have had a noticeable effect on economic growth. And the promise of broadly shared prosperity has not been realized.

Most of the gains from economic growth in recent decades have gone to the top of the income distribution while the inflation adjusted wages of the working class have been relatively flat. Furthermore, the tax cuts have not paid for themselves as promised, and it hasn’t even been close. The Bush tax cuts have already cost us trillions in revenue, and if they are extended for high income tax payers, they will cost us roughly another trillion over the next decade.

The failure of Republicans to deliver on their promise that tax cuts would be mostly self-financing is a large factor in the deterioration in our long-run fiscal outlook, and it is putting considerable pressure on programs such as Social Security. In fact, the Bush tax cuts can be thought of as a loan from the Social Security Trust Fund that was supposed to be paid back with the revenues from higher economic growth, a loan that is presently in default.
To see this, recall that the government began intentionally collecting a surplus from the Social Security program beginning in 1983 in order to prefund the retirement needs of baby boomers. The idea was to run a surplus for several decades while the baby-boomers were still working to get ready for the deficit years the system would experience after they retired.

The revenue from Social Security over and above what was needed to fund payouts reduced the overall government debt and allowed taxes to be lower than they could have been without these surplus funds. For example, the surplus that Bush inherited from the Clinton administration was largely due to the Social Security Trust Fund, and Bush argued it would be better to give this surplus to the private sector through tax cuts than to leave it in the hands of the government.

But it wasn’t better. The income of the wealthy grew as they pocketed the tax cuts, but workers experienced stagnant wages, a recession that hit working class households particularly hard, and intense pressure to cut important social programs.

Despite their failed promises, the Republican Party is asking that we extend the tax cuts for the wealthy, and some are even calling for further reductions in tax rates.

However, if the Republican Party is truly the party of business, then surely it will understand that no responsible financial institution would continue to invest in a business that failed meet, or even come close to the growth and revenue projections that justified the investment in the first place.

The payoffs from tax cuts that were promised during the Bush years have not been realized, and the failed promises about growth and revenue have damaged the health, education, and retirement programs the working class depends upon in our increasingly globalized economy.

A true party of business would end our investment in the false promise of supply-side economics. However, a party with a goal of reducing the scale of programs such as Social Security and Medicare along with delivering tax cuts to wealthy political backers would use arguments about the economic effects of tax cuts to disguise its true intentions.

Which description fits best? Many Republicans still claim that tax cuts for the wealthy enhance economic growth despite the evidence to the contrary, but it’s rare to hear a Republican admit that these supply-side policies have failed.

One of the big issues Congress faces is whether the Bush tax cuts should be extended. If Congress fails to act, the tax cuts will expire automatically at the end of this year. If they are extended, Congress must also decide whether the extension should be permanent or temporary, and whether the wealthy should be included.

One of the most frequent arguments for extending the tax cuts and for making them permanent is that failing to do so would hurt economic growth. Is this true? One way to answer the question is to ask whether the Bush tax cuts had a large impact on growth after they were enacted.

What impact did the Bush tax cuts have on economic growth?
The evidence is not favorable. For example, according to this Census report (see table A1), median household income in 2007, adjusted for inflation, was lower than it was in 2000. And as the non-partisan Center on Budget and Policy Priorities reports, based upon data from the Bureau of Labor Statistics, employment growth was particularly weak, "with employment and wage and salary growth ... lower than in any previous post-World War II expansion. Employment grew at an average annual rate of only 0.9 percent from November 2001 to September 2007, as compared with an average of 2.5 percent for the comparable periods of other post-World War II expansions. In addition, real wages and salaries grew at a 1.8 percent average annual rate in the 2001-2007 expansion, as compared with a 3.8 percent average annual rate for the comparable periods of other post-World War II expansions."

Thus, there is little evidence to support that the Bush tax cuts had a significant effect on growth. In addition, contrary to the argument that the tax cuts would pay for themselves being made at the time the tax cuts were enacted, the deficit ballooned as a result of the tax cuts.

Why didn't the tax cuts have a stronger impact on growth?
For one, most of the tax cuts Bush initiated in 2001 weren't of the type that would be expected to have a large impact on growth. As noted by former Reagan economic advisor Bruce Bartlett, "the Bush plan was a hodge-podge of tax gimmicks designed more to win the support of various voting blocs than stimulate growth." After listing the various elements of the tax proposals he then concludes that "The only supply-side element was a modest reduction in the top statutory income tax rate from 39.6 percent to 33 percent -- higher than it had been during Bush's father's administration -- that would be phased-in over a number of years."

However, the second round of tax cuts under Bush in 2003 was a bit more faithful to the supply-side cause. The second round involved a reduction in the tax rate on both capital gains and dividends to 15 percent, with the dividend cut being particularly large. But even so, as the statistics above on income and employment growth attest, there wasn't much evidence that these tax cuts had a large impact on economic growth. Quoting Bartlett again, "Subsequent research by Federal Reserve economists [1,2,3] has found little, if any, impact on growth from the 2003 tax cut." Thus, even though the tax cuts were much better targeted than in 2001, the effect on growth was still negligible.

An analogy with the government might be helpful in understanding why the tax cuts didn't have a larger effect even though they were much better targeted than the 2001 tax cuts. When the government increases taxes, it can use the money for government investment (e.g. roads, electrical systems, bridges) or for government consumption (e.g. paper for a government office, gas to run a government vehicle, or a fireworks show to celebrate an important event). If the government uses the money for investment, and uses it wisely, the enhanced infrastructure allows us to increase our economic growth rate. But with consumption spending, e.g. an elaborate government fireworks show, there may be immediate benefits to those who watch and participate, but this type of spending doesn't do anything to increase economic growth in the future.

Tax cuts, which send money in the other direction -- from government to households -- can be viewed similarly. A tax cut can be used to fund productive investment, e.g. to open a new business, or it can be used for consumption, e.g. for an elaborate private fireworks show or some other use that does nothing to enhance our long-run growth. To the extent that tax cuts are used for something other than investment, economic growth will be lower.

What other effects can tax cuts have on economic growth?
Even the part of the tax cuts used for investment purposes may not result in enhanced long-run growth. Suppose, for example, that the money is invested in housing to take advantage of rising prices, but people are unaware that the price increases are being driven by a housing bubble. This will look at the time as though growth is robust -- and this helps to explain the little bit of growth that did come about in the period before the housing bust -- but the growth disappears as soon as the bubble pops. In fact, this type of investment leads to reduced growth relative to what could have been achieved with other investments. Thus, to the extent that tax cuts helped to fuel the housing bubble, they actually harmed rather than helped long-run growth.

The Bottom Line We are not going to solve our budget problems with spending cuts alone. Like it or not, tax increases will be required. What's unknown is the types of taxes that will be increased and who will be asked to pay them. Economic theory helps us to determine which types of taxes are best in terms of efficiency, but the equity of taxes -- who pays them and whether it's fair -- also matters. Questions of equity must be resolved in the political arena, economics cannot help here, and equity is one of the factors that determines whether a tax is feasible. If allowing the Bush tax cuts to expire for the wealthy is the only acceptably equitable way to raise taxes in this political environment, then there is little evidence that this will be harmful. The cost of allowing these tax cuts to expire is low, and there is much to be gained in terms of reducing our long-term budget problem.

The gap between rich and poor is at its highest level ever and the economy has been a disaster since the implementation of the Bush tax cuts.

The people who think making the rich richer will somehow benefit them or society as a whole are the ultimate suckers. It's no different than a dog sitting obediently at the foot of a table, wagging his tail happily waiting for a crumb to fall to the ground from his master's plate. The trickle down nonsense is a theory that was put to the test and every conceivable economic barometer says it failed miserably.

I can't believe we still have to explain to righties how trickle down eonomics was/is a complete and utter failure...even HW called it voodoo economics back in the day

It's mind-boggling, really. It's like a complete rejection of reality, just more blind willful ignorance. The data and the facts are right there. You don't have to be an economics whiz to see the results by just watching current events over the past decade.

It's the same 'voodoo economics' that's been around for as far back as the panic of 1896 when it was called horse and sparrow economics. Just the same recycled, tried-and-failed, special interest bullshit.

Yet certain people just eat it up, even if it hurts them. Makes no sense.

Simple answer. A significant portion of the wealthy are Republicans. Why would they raise the tax on their own? But I can see this from the side of the wealthy. Everyone should pay their share, but taxing someone more because they happen to be more successful is extremely unfair. The problem with attacking the rich is it's not going to come out of their pockets. Many of the wealthy are business owners. If you going after them as far as taxes, they'll raise the price of their goods or they'll lay off employees. Absolutely everyone should pay their own share, but no one should be getting off easy. This creates resentment and ultimately, an economy that will not improve. The problem is the current system provides so many loopholes for the rich that everyone else ends up getting f*cked in the ass.

Quote:

Originally Posted by Droid101

Great economies are built by a strong middle class (to create demand for products and services).

This man gets it. The problem is the gap between the rich and poor is getting farther and farther apart. If the middle class is shrinking, they obviously lose out because they don't have the extra money to spend. Business owners lose out because the majority of their clientele simply cannot afford to conduct business. It's a lose-lose for everyone.

When Reagan became president and throughout the 90s, the middle class was booming. Decreased unemployment and extra money for the middle class to spend kept the economy going. You would occasionally see a brief recession, but you can't have growth all the time. It's not possible. But the recessions were very brief and things bounced back quickly.

Fast forward another decade. Add increased reckless spending and a completely unnecessary war that took us from a surplus to umpteen trillion in debt, we're now stuck in this mess.

In regards to Obama, should everyone pay their fair share? Absolutely and he is 100% correct. But the way he's going about it is 100% WRONG. You cannot increase taxes when the economy is poor. That's basic economics. You need a consistent and self-sufficient economy before you can even think about raising taxes.

However, the mess we're in actually has very little to do with taxes. The real reason we're in this mess is because of reckless spending. If the government stopped spending money on stupid sh*t, taxes would be a non-issue.